11/18/2009 @ 3:10PM

Manage Your Environmental Crisis Before It Happens

The time to put together a management plan for handling all the negative press you get from an environmental or social crisis is before it happens, not after. Yes, you have a crisis management plan in a handbook somewhere, but how many of us know exactly what we would do if our plant in Juarez began leaching toxins into the water supply, or if a family in Phoenix were to discover banned substances in a toy you had sold them and the press or a nonprofit turned it into a national headline?

This past summer Trader Joe’s found itself being called “Traitor Joe’s” after Greenpeace ranked it 17th out of 20 grocery store chains–and worst among national chain–in sustainable seafood practices because of its lack of publicly available purchasing policies. Around the same time, Sigg, a water bottle brand popular among environmentally conscious consumers, had to reveal that its bottle linings contained bisphenol-A, a hormone-disrupting chemical, and the CEO had to humbly admit he had known about it long before the public did.

Those are just two examples of how companies recently have had to manage crises related to sustainability. And those are companies with well-established brands and good environmental track records. Other businesses have less pre-existing credibility to fall back on and are just beginning to make sustainability part of what they’re all about. Rankings such as Newsweek‘s recent 2009 Green Rankings of U.S. companies, Climate Counts’ company scorecards, and Greenpeace’s electronics and seafood guides all raise the stakes even higher. This growing spotlight on companies provides both opportunity for recognition of leadership and serious potential risk.

The main tool stakeholders and activists have for forcing you to change your company’s practices is holding you to your own promises, including any promises that are just implicit in having a “green” brand. And they will. You must be prepared to offer a timely and substantive response to activist campaigns if you want to avoid lasting brand damage and to turn a potentially negative incident into an opportunity to learn more about your environmental impact, improve your products and services and engage with your stakeholders. Here are three tips to help you respond to–or, better, avoid–such situations:

1. Know what you know–and what you need to find out.

The issues about which activists launch protests are often complicated and cut across traditional corporate divisions. For instance, in 2008
Unilever
was hit by Greenpeace protests over its sources of palm oil, which is linked to the destruction of Indonesian rainforest. To fully understand the issue and how to respond to it, Unilever officials likely would have had to bring together expertise from product engineers, sourcing, affected business units, corporate risk management, investor relations, corporate communications and perhaps even outside experts. Those are constituents who don’t generally speak with one another regularly in most companies. They should.

Sometimes just finding the person who has the crucial information you need can take two or three days. Shorten that time by having a quarterly check-in across all relevant divisions, to stay prepared. The main question for the first such meeting should be: Where is our largest reputational risk concerning sustainability? Then the group should undertake a comprehensive sustainability risk assessment to identify potential hotspots, so that it can address underlying issues as well as prepare to react concretely to criticism.

If an event occurs despite your best efforts to mitigate your risks, the first thing to do is to immediately assemble a response team made up of people from across the organization who can pull together a complete picture of the problem and of your options. The team must know just how much it knows, so it can be aware of what it needs to find out. You may already be doing more to address the crisis than you are aware of, and you want to know that right away. In the eyes of the public, your first response is your only response.

Follow-through is critical. After your initial meeting, establish a cadence of daily or twice-daily calls with all the parties involved. Include senior vice-presidents who can make decisions as well as directors and managers who have the data. You need both data and decision-making power for any quick response. Having one without the other will only delay you, and with each passing hour you’ll have less ability to frame the debate on your terms.

2. Acknowledge the event, and put it in context.

Usually the first response to an action by an activist environmental organization is a press release. Too often it misses the mark, either focusing too closely on specifics and missing the bigger picture or falling back on general and essentially meaningless statements about responsible corporate citizenship. An effective press release acknowledges and addresses the issue at hand without dwelling on it, and then places it in a larger context.

There is often more risk in appearing to sidestep an issue than in engaging with it head-on. Consumers expect to have their intelligence respected, but they don’t expect companies to be perfect, apart from companies like Patagonia or Seventh Generation that have built loyal followings with their strong image of corporate responsibility. A company can and should acknowledge its shortcomings, especially if there’s a clear plan for improved environmental performance.

Placing the issue in a larger context allows you to address the full range of what matters about sustainability for your company and its customers and shareholders. This can potentially lessen some of the damage from more focused criticism. However, your description of your larger sustainability strategy must be clear, concise and compelling. A general statement of corporate responsibility will never deflect much criticism; a concise statement of the company’s sustainability priorities, the effects of its efforts to date, its meaningful goals for the future and where the matter at hands fits in can go a long way in inspiring public confidence.

3. Engage in dialogue.

When a company finds itself attacked by environmental activists, pursuing communication with the attacker may be the last thing that comes to mind. However, it can be a valuable way to address the issues at hand and avoid future assaults. Organizations such as Greenpeace and Rainforest Action Network may use extreme tactics to draw media attention, but they also have sophisticated understandings of environmental issues and of the players in the market. Behind every activist unfurling a protest banner there are likely two or three others with technical or professional backgrounds studying an environmental dilemma that you face. Environmental organizations rely on funding, and they know they must show that their actions lead to positive change if they are to win further donations. They therefore have an incentive, and often the in-depth knowledge, to help a company improve its environmental performance.

Positive and productive relationships with activist environmental organizations start with transparency, even under nondisclosure agreement if necessary. A nondisclosure agreement can allow you to share confidential information, such as supply chain or manufacturing details, with an environmental organization and know that that information won’t end up in the hands of a competitor. In Trader Joe’s case, the grocery chain had refused to disclose to Greenpeace anything about any seafood purchasing guidelines it had, so Greenpeace had to rely solely on publicly available data for its seafood sustainability scorecard. That didn’t help either group. You’ve got to pursue a dialogue, with both sides sharing what they know, believe and want.

If the conflict is over questionable policies or actions, not lack of information, activist environmental organizations may be able to help you develop solutions that mitigate damage and even create incremental value.
Kimberly-Clark’s
recent partnership with Greenpeace to develop a more sustainable sourcing policy after years of an antagonistic campaign from the activist organization is a great example of this. And of course there are many non-activist nongovernmental organizations, from the World Wildlife Fund to Conservation International to the Environmental Defense Fund, that want to help businesses with environmental sustainability.

Through these three steps of knowing, acknowledging and then engaging in dialogue, you can effectively react to a crisis arising from activism or, better yet, avoid that crisis in the first place. To begin, book just one hour within the next few weeks with a cross-functional team of business group leaders, your sustainability department, investor and stakeholder relations people and corporate communications. You will be surprised by what you learn.

Stephen Linaweaver is associate principal at GreenOrder, an LRN Company. Brad Bate is senior analyst with GreenOrder. GreenOrder is a strategy and management consulting firm that helps companies turn environmental innovation into business value.